Aforti resumes transferring borrower repayments

27.09.2019

mintosblog

Update on 27.09.2019: An update on Aforti Finance with answers to the most common questions we have received from investors.

Why are there 60+ days late Aforti Finance loans and why does it seem that payments from Aforti Finance are not being transferred?

Aforti Finance continues transferring payments to the Mintos marketplace. Mintos transfers these payments first to cover settlements that had accumulated towards investors before automatic repayments and buybacks for loans originated by Aforti Finance were suspended on August 7, 2019 (see below earlier posts), and second – to cover ongoing borrower repayments and loan buybacks from the remaining balance. As a result, some loans remain 60+ days late for the time being. 

How often does Aforti Finance make payments to Mintos?

Aforti Finance transfers payments on up to a daily basis.

What is the financial situation of Aforti Finance?

Financial performance is a direct reflection of loan portfolio performance. This is best portrayed in Aforti Finance’s report which we invite you to follow. These reports are used for our due diligence as well as risk rating updates. See more information on risk rating updates in earlier blog posts on Aforti below. 

Does Aforti transfer all that they get for respective loans financed via Mintos?

From what we see, yes – Aforti transfers all they get for respective loans financed on Mintos. 

Are you getting any feedback from Aforti Finance? The current statistic is at least concerning, having almost no current loans and some being 60+ days old. I know that you are passing the funds whenever you receive them from Aforti but it looks like they have stopped passing them.

Aforti Finance is transferring payments, but investors see the delay due to the aforementioned accumulated settlements which are still outstanding. We are in close cooperation with  Aforti Finance’s management and keep track of payments transfers daily. 

It has been a month since the last update on Aforti Finance; why has it taken so long? 

We have taken the time to observe the situation and solve immediate uncertainties, making sure payment transfers to investors remain on up to a daily basis. 


Update on 16.08.2019: From today we will process the payments and buybacks and credit investors’ accounts as soon as Aforti Finance makes daily transfers to us in full.

Aforti Finance will resume passing borrower payments to investors on Mintos starting from today. Automatic repayments and buybacks for loans originated by Aforti Finance were earlier suspended on August 7th. From today we will process the payments and credit investors’ accounts as soon as Aforti Finance makes daily transfers to us in full.

Disruptions to transferring borrower payments from Aforti to Mintos arose amidst technical issues with the reconciliation of outstanding balances and discrepancies in the buyback status between Aforti and Mintos IT systems. This resulted in cash flow mismatches and irregularities in Aforti transferring borrower repayments to investors on Mintos marketplace.  

To protect investors, the suspension of trading Aforti Finance loans on the Secondary Market will continue until further notice.

We thank our investors for their patience as we worked through this situation.

Considering the previous and this week’s developments with Aforti Finance, we combined our last announcements to share a recap of the situation.

Nine months ago, in December 2018, we started to notice a weakening performance of loans originated by Aforti Finance. At the same time, due to technical glitch loans that were current according to Aforti Finance IT system were reported to be late and subsequently went into buyback status on the Mintos side. That created a mismatch in cash flows from borrowers that Aforti Finance received and cash flows they had to pass to investors. In January 2019, after discussions with Aforti Finance, we proceeded with a mutual agreement that Aforti Finance will not be placing new loans on the Primary Market to avoid further discrepancies. Aforti Finance continued to service loans that were funded on the Mintos marketplace. Also, investors could sell and buy loans originated by Aforti Finance on the Secondary Market on Mintos.

In light of issues described above and adverse changes in the mood of the Polish securitization and bond market, we reflected our view by downgrading Aforti Finance to C+ in March 2019. During this time Aforti continued to service the loans and investors received the payments that were due to them. Accordingly, the total outstanding portfolio of loans originated by Aforti Finance and funded on the Mintos marketplace decreased from EUR 5.7 million on December 31, 2018, to EUR 2.2 million as of August 12, 2019.

Last week, due to the growing mismatch in cash flows that Aforti Finance received from borrowers and that they have to pass to investors, we experienced disruptions with Aforti Finance passing payments to investors on the Mintos marketplace. As a result, we decided to suspend automatic repayments and buybacks. We also suspended trading of Aforti Finance loans on the Secondary Market to protect investors while we clear the situation. We set up an immediate meeting with Aforti Finance in Warsaw, Poland to assess the cause of the delays and most importantly – to understand next steps. Aforti Finance has now addressed the discrepancies in the loan statuses in their IT system and on Mintos, and has committed to resume payments to investors.

Mintos team closely followed comments and questions raised to our Investor Service team and posted on our blog and social media. It took time while we have gathered all facts, double checked them and confirmed with Aforti Finance, a subsidiary of publicly listed Aforti Holdings, before taking any decisions or actions and communicating them to investors. We remain committed to timely communication and transparency with our investors.

Please feel free to reach out to our Investor Service team in case you have any questions. We are always happy to help.